Key Points

Banks have set aside over £6 billion to pay out mis-sold payment protection insurance claims. It's become a straightforward process, and we get scores of DIY success reports daily.

Yet those using claims firms can give away 30% of payouts, which can total thousands of pounds, for just filling in a couple of forms.

Worse still, the action comes amid a flurry of unsolicited texts and calls from firms trying to lure consumers into using their services with false promises or outright lies. Many have reported getting texts urging them to reclaim PPI when they've never taken the product in the first place.

So we've teamed up with Which? to launch best-practice guidance we want claims companies to follow. This includes:

All terms, conditions and fees to be published online, making them freely available to consumers without a requirement to share any personal information

Fees to be based only on the money paid directly to the consumer

Firms to advise potential customers upfront of free options to make a claim

Firms never to claim they improve your chances of success or an increased payout compared to making a claim independently

What should you do?

Check now if you can reclaim £1,000s. If you've had a loan or credit card and were told PPI was compulsory, had it added without knowing, were self-employed, unemployed or retired, it's likely you were mis-sold and can get the money back even if the debt's repaid.

Is it ever worth using a claims handler? Rarely, though those with mental health or literacy problems or claiming from a company that wasn't FSA regulated may sometimes find it worthwhile. The independent Financial Ombudsman Service says those who use a claims firms have no higher success rate than those who do it themselves.

The MSE & Which? claims handler checklist. If you decide to use claims handlers, at least ensure they're decent. We've put our heads together with Which? to devise a checklist to ask a claims handler before using them. It includes checking they don't take money upfront, they don't break Ministry of Justice (MoJ) guidance by claiming to guarantee a better success rate and don't try to sell you other services.

Martin Lewis, creator of MoneySavingExpert.com, says: "Even if the claims handling companies all played it by the book, with mis-sold PPI payouts of £3,000 to £5,000 now commonplace, the price charged is far too high. Reclaiming is easy for many, just a case of making a call or writing a letter.

"Yet claims handlers often charge over 30%, which for many means losing over £1,000 of their payout, and for most, it's just not worth using these firms."

Under-cover investigation

Which? has also revealed the results of its investigation into a number of firms and it says it will pass the worrying evidence gathered to the claims management regulator, the MoJ.

Misleading advice, unfair contract terms and a lack of transparency about fees are all too common, the probe found.

Posing as someone who thought they might have been mis-sold PPI, Which? mystery shopped 25 firms. It says most failed to follow rules set by the MoJ, and Which? identified problems with every company investigated.

Two thirds failed to advise the caller about the Financial Ombudsman Service, which consumers can take their complaint to if rejected by the PPI seller, despite being required to do so.

Six repeatedly told the caller they had more chance of success or would receive more compensation using a claims firm than by submitting a claim independently. The Ombudsman regularly states this is untrue. Which? also found contract terms that were unfair.

The typical fee charged by a claims firm is 30% of the compensation received, but the definition of compensation varies.

Consumers may assume the fee will be calculated based on the lump sum of money paid to them, but some firms include a reduction in future loan repayments due to the cancellation of PPI as part of the compensation.

As a result, some could receive far less than they expect, and in some cases even end up owing the claims firm money.

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